Wednesday December 3, 08:31 AM
IMF not seeking Latvia currency system change-c.bank
RIGA, Dec 3 (Reuters) - The International Monetary Fund has not asked Latvia to change its currency peg to the euro, the head of the central bank was quoted on Wednesday as saying.
Fears the Fund might request a devaluation of
the lat have arisen after Latvia slid into recession and had to rescue its second largest bank, Parex.
'There is no threat to the lat,' central bank governor Ilmars Rimsevics told newspaper Latvijas Avize. 'The IMF is not asking for any change in the exchange rate.'
The lat is pegged to the euro at a central rate of 0.7028 euros, with a 1 percent fluctuation band. It has been stuck at the weak end of the bank, 0.7098, for nine weeks and the central bank has spent more than 900 million euros to support it.
Rimsevics said only the central bank had the right to change the exchange rate peg.
'Only bad things would come from a lat devaluation or exchange rate change: inflation would rise, raw materials would become dearer, Latvian companies would lose competitiveness because they have to buy many things abroad,' he said.
Latvia's finance minister has said that his experts have estimated that the country needs a loan of 5 billion euros from the IMF and EU. (Reporting by Patrick Lannin; Editing by Victoria Main) Keywords: LATVIA IMF/
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